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CE Resource, Inc. v. Magellan Group

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA


July 7, 2009

CE RESOURCE, INC., PLAINTIFF,
v.
MAGELLAN GROUP, LLC; JOSEPH KNIGHT DEFENDANTS.

The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge

MEMORANDUM AND ORDER

Plaintiff CE Resource, Inc. ("Plaintiff") initiated this action on December 9, 2008. Presently before the Court is a Motion to Dismiss and/or for Summary Judgment filed by Defendant The Magellan Group, LLC ("Magellan"). For the following reasons, Magellan's Motion is denied.*fn1

BACKGROUND*fn2

Plaintiff was established for the purpose of providing continuing medical education to nurses and is accredited by the American Nurses Credentialing Center's Commission on Accreditation, the Accreditation Council for Continuing Medical Education, and various individual states.

In September 2007, Plaintiff and Defendant Joseph Knight ("Knight"), a freelance writer, entered into a Freelance Writer Agreement. Pursuant to that Agreement, Knight represented that a course on "The Herpes Viruses," which he provided to Plaintiff, was the result of his original work. Knight also denied having previously submitted the product to any other party or to having published the course, and agreed to refrain from doing so in the future. Plaintiff subsequently registered the product with the United States Copyright Office.

Plaintiff later conducted an internet search and came to the conclusion that Knight had submitted another course series, "Herpes Simplex Virus: An Introduction" and "Chicken Pox: The Varicella Zoster Virus," which allegedly copied substantial portions of the product belonging to Plaintiff, to Magellan for publication.

According to Plaintiff, Magellan purchased the infringing courses from Knight, and Knight delivered one or more copies of those infringing courses to Magellan. Additionally, Plaintiff claims that Magellan copied, distributed, and sold copies of the infringing products and willfully ignored Knight's wrongful acts. Plaintiff also contends, inter alia, that Magellan intentionally uploaded as much content as possible to its website without regard to industry standards or practices, and that, contrary to its own advertising, Magellan failed to conduct due diligence regarding its continuing education courses.

Consequently, Plaintiff filed this action alleging causes of action for Copyright Infringement (against all Defendants), Breach of Contract (against Knight only), and Violations of California Business and Professions Code §§ 17200, et seq., and 17500, et seq. (against Magellan only).

ANALYSIS

As a threshold matter, the Court notes that Defendant Magellan, with no explanation to the Court, untimely filed its instant Motion. The Court finds this late filing consistent with Magellan's pattern of dilatory behavior throughout the relatively short span of this litigation.

First, Magellan failed to timely file any response to Plaintiff's FAC, a failure that resulted in an entry of default by the Clerk of the Court. That entry of default was later vacated pursuant to stipulation of the parties.

However, by way of that stipulation, the parties agreed that Defendant Magellan was to respond to the FAC not later than April 6, 2009. Nevertheless, Defendant did not file its Points and Authorities in support of its instant Motion until 8:33 p.m. on April 7. Additionally, Magellan wholly failed to file any Reply to Plaintiff's Opposition to the Motion to Dismiss.

Accordingly, Magellan is hereby admonished that the dates set in this Court are mandatory and adherence to applicable rules is not optional. This Court will not condone the blatant disregard of both the local and federal rules that Magellan's conduct demonstrates. Failure to adhere to any future deadlines may result in the imposition of sanctions which may include monetary sanctions, orders precluding proof, elimination of claims or defenses, or such other sanctions as the Court deems appropriate. Nevertheless, in the interest of judicial economy, the Court will proceed to address the merits of Magellan's Motion, which is now denied.

A. Personal Jurisdiction

Defendant first challenges this Court's jurisdiction arguing that "the only statements made by Plaintiff regarding personal jurisdiction over Magellan are conclusory, and Plaintiff provides not a single fact that would support jurisdiction." Motion, 4:3-6. However, according to Plaintiff, "[t]his Court has personal jurisdiction over Magellan because Magellan conducts business in California, and maintains a website accessible in California." FAC, ¶ 5.

"When, as here, subject matter jurisdiction is premised on a federal question, the exercise of personal jurisdiction over a non-resident defendant must be authorized by a rule or statute and consonant with the constitutional principles of due process. Because there is no applicable federal statute governing personal jurisdiction, [the Court's] starting point is California's long-arm statute." Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1123 (9th Cir. 2002). "California Code of Civil Procedure § 410.10, California's long-arm jurisdiction statute, allows for the exercise of jurisdiction 'on any basis not inconsistent with the Constitution of this state or of the United States.'" Rocke v. Canadian Auto. Sport Club, 660 F.2d 395, 398 (9th Cir. 1981). "Because California's long-arm jurisdictional statute is coextensive with federal due process requirements, the jurisdictional analysis under state law and federal due process are the same." Yahoo! Inc. v. LaLigue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199, 1205 (9th Cir. 2006).

"Constitutional due process is satisfied when a non-resident defendant has 'certain minimum contacts with [the forum] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Glencore Grain, 284 F.3d at 1123, quoting International Shoe Co. V. Washington, 326 U.S. 310, 316 (1945). "Depending on the nature of a foreign defendant's contacts with the forum, a federal court may obtain either specific or general jurisdiction over him.

A court exercises specific jurisdiction where the cause of action arises out of or has a substantial connection with the defendant's contacts with the forum. Alternatively, a defendant whose contacts are substantial, continuous, and systematic is subject to a court's general jurisdiction even if the suit concerns matters not arising out of his contacts with the forum. Whether dealing with specific or general jurisdiction, the touchstone remains 'purposeful availment.' By requiring that 'contacts proximately result from actions by the defendant himself that create a 'substantial connection' with the forum State,' the Constitution ensures that 'a defendant will not be haled into a jurisdiction solely as a result of 'random,' 'fortuitous,' or 'attenuated' contacts.'" Id. (internal citations omitted) (emphasis in original).

According to Magellan, it "lacks the minimum contacts with the State of California necessary to confer jurisdiction on this Court." Id., 7-8. Magellan relies on the following facts in support of its instant Motion:

1) Magellan is a Maryland LLC with its principal place of business in Maryland.

2) Magellan has historically paid corporate taxes only in Maryland.

3) Customers purchasing courses from Magellan are required to agree that Maryland law is applicable to disputes arising from those purchases.

4) The agreement entered into between Knight and Magellan stated that it was to "be construed pursuant to the laws of the State of Maryland applicable to contracts made and performed entirely therein."

5) Magellan's website states, "If you believe your work has been copied in a manner that constitutes copyright infringement, you may notify our copyright agent," who is located in Maryland.

6) Knight allegedly delivered the infringing Product to Magellan in Maryland.

Motion, 4:10-5:5.

Nevertheless, in Opposition to Defendant's instant Motion, Plaintiff points to a number of facts ignored by Magellan:

1) Magellan is specifically licensed to offer continuing education in California.

2) Defendant Knight resides in California and Magellan reached in to California to make purchases from Knight.

3) Magellan's highly interactive, commercial website allows California customers to view, browse and purchase directly from the website.

4) The courses sold by Magellan are located on the website and can be reviewed and studied via the site.

5) Tests are taken and graded online, and a certificate of completion is delivered from the website to the customer.

6) Customers are able to establish online accounts to manage the education of employees.

7) Magellan targets California consumers with its advertising. Specifically, Magellan provides on its website information regarding its California certification and advertises "[a]ll state nursing boards accept our nursing ceu courses because they have been pre-approved by the California Board of Registered Nursing (Provider No. CEP14669)."

8) Magellan advertises products that are expected to be available to California consumers in the future.

9) Magellan provides "useful links" on its site, some of which link to the California Board of Registered Nursing and the American Association of Critical Care Nurses, which is also based in California.

10) Finally, Magellan confirms via its "Frequently Asked Questions" section that its courses "count for credit in California."

Opposition, 6:8-7:2.

This Court concludes that it may properly exercise specific jurisdiction over Defendant Magellan.*fn3 "Where the nonresident defendant's contact with the forum state is too tenuous to support the assertion of jurisdiction for the purpose of hearing unrelated claims, the constitutionality of the assertion of jurisdiction over related claims is judged under a three-pronged standard: '(1) The nonresident defendant must do some act or consummate some transaction with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws. (2) The claim must be one which arises out of or results from the defendant's forum-related activities. (3) Exercise of jurisdiction must be reasonable.'" Rocke, 660 F.2d at 398, quoting Data Disc, Inc. v. Systems Technology Associates, Inc., 557 F.2d 1280, 1287 (9th Cir. 1977).

"When personal jurisdiction is challenged by motion as an initial response, and 'the [district] court determines that it will receive only affidavits or affidavits plus discovery materials, these very limitations dictate that a plaintiff must make only a prima facie showing of jurisdictional facts through the submitted materials in order to avoid a defendant's motion to dismiss.'" Myers v. Bennett Law Offices, 238 F.3d 1068, 1071 (9th Cir. 2001), quoting Data Disc, 557 F.2d at 1285.

"When the plaintiff's version of the facts is not directly controverted, it is taken as true for the purposes of a Rule 12(b)(2) motion. Conflicts between the facts in the parties' affidavits are resolved in the plaintiff's favor." Jeske v. Fenmore, 2008 WL 5101808, *2 (C.D. Cal. 2008).

1. Purposeful Availment

"The requirement that the defendant do some act purposefully to avail himself of the laws of the forum state ensures that a person is not hailed into court as the result of random, fortuitous, or attenuated contacts or on account of the unilateral activity of third parties." Brand v. Menlove Dodge, 796 F.2d 1070, 1074 (9th Cir. 1986), citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473-474 (1985). "Despite its label, this prong includes both purposeful availment and purposeful direction. It may be satisfied by purposeful availment of the privilege of doing business in the forum; by purposeful direction of activities at the forum; or by some combination thereof." Yahoo!, 433 F.3d at 1205.

"In the internet context, the Ninth Circuit utilizes a sliding scale analysis under which 'passive' websites do not create sufficient contacts to establish purposeful availment, whereas interactive websites may create sufficient contacts, depending on how interactive the website is." Jeske v. Fenmore, 2008 WL 5101808, *4 (C.D. Cal. 2008), citing Boschetto v. Hansing, 539 F.3d 1011, 1018 (9th Cir. 2008).

"'[T]he likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of the commercial activity that an entity conducts over the Internet.'" Id., quoting Zippo Mfg. Co. v. Zippo Dot Com, 952 F. Supp. 1119, 1124 (W.D. Pa. 1997).

"A passive website is one that 'does little more than make information available to those who are interested in it.' In contrast, a highly interactive website is one that allows the defendant to 'enter[] into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet. And between these two extremes are interactive websites that allow a user to exchange information with a host computer. In this latter context, 'the exercise of jurisdiction is determined by examining the level of interactivity and [the] commercial nature of the exchange of information that occurs on the Website.'" Id., *4, quoting Zippo, 952 F. Supp. at 1224.

In this case, Plaintiff has adequately shown that Magellan purposefully availed itself of the laws of California. Magellan is licensed in California to provide continuing education programs to California citizens. Furthermore, Magellan directed its commercial advertising at those California residents who sought continuing education. Additionally, Magellan's website acted as even more than a virtual store. Indeed, customers could study, take exams, and have those exams graded all in a virtual classroom.

Finally, Magellan allegedly reached into California to acquire the infringing product from Defendant Knight, a California citizen, and then provided that product via its website, directly to California customers.

2. Arising Out Of

"In a specific jurisdiction inquiry, [the Court] consider[s] the extent of the defendant's contacts with the forum and the degree to which the plaintiff's suit is related to those contacts. A strong showing on one axis will permit a lesser showing on the other." Yahoo!, 433 F.3d at 1210. The Ninth Circuit has applied a "but for" test to determine whether a plaintiff's claims arise out of a defendant's forum conduct. Glencore Grain, 284 F.3d 1123. In this case, Plaintiff's claims arise out of Defendant Magellan's activities because but for Defendant's purchase of the allegedly infringing product from a California resident, and but for, inter alia, Defendant's sale of the allegedly infringing product to California residents, Plaintiff would not have experienced harm in California. See Jeske, 2008 WL 5101808, *5. Accordingly, this Court finds that Plaintiff's claims arise out of and relate to Magellan's forum-related activities. See id.

3. Reasonableness

The Court "examine[s] seven factors to determine whether exercise of jurisdiction is reasonable: existence of an alternative forum; burden on the defendant; convenience and effectiveness of relief for the plaintiff; most efficient judicial resolution of the dispute; conflict with sovereignty of the defendant's state; extent of purposeful interjection; and the forum state's interest in the suit." Brand, 796 F.2d at 1075.

"Under this prong, 'it is not enough that the [defendant] demonstrate that some other forum is more reasonable than California, [it] must show a due process violation; [it] must show that jurisdiction in California would make the litigation 'so gravely difficult and inconvenient that a party unfairly is at a severe disadvantage in comparison to [its] opponent."" Jeske, 2008 WL 5101808, *6, quoting Sher v. Johnson, 911 F.2d 1357, 1365 (9th Cir. 1990). "[D]ismissal under this prong is only appropriate in 'the rare situation in which the plaintiff's interest and the state's interest in adjudicating the dispute are so attenuated that they are clearly outweighed by the burden of subjecting the defendant to litigation within the forum.'" Id., quoting Oakley, Inc., 287 F. Supp. 2d at 1117.

Magellan has wholly failed to meet its burden of showing that it would be unreasonable to subject it to personal jurisdiction in this Court. Indeed, Defendant failed to address the reasonableness of this Court's jurisdiction at all, instead placing its eggs solely in the "minimum contacts" basket.

This Court is unconvinced that the burdens facing Magellan in this forum rise even close to the threshold where due process is implicated. Moreover, Magellan has not shown that another forum would be more convenient or efficient and has failed to point to any reason the Court should disregard California's strong interest in resolving the instant dispute. See Jeske, 2008 WL 5101808, *7. Finally, Defendant has clearly taken numerous affirmative steps to inject its activities into this State. As such, Magellan's argument that it is not subject to personal jurisdiction in this Court is rejected, and Defendant's Motion to Dismiss is denied.

B. 28 U.S.C. § 1404(a)

Defendant next argues that, "Maryland is a more convenient forum and the Plaintiff's complaint, if brought at all, should have been brought in that state." Motion, 7:13-15.

Pursuant to 28 U.S.C. § 1404(a), "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." "Under this section, the district court has discretion to adjudicate motions for transfer according to an individualized, case-by-case consideration of convenience and fairness. In considering motions to transfer venue under this section, courts look to:

(1) the convenience of the parties; (2) the convenience of the witnesses; and (3) the interests of justice...The burden is on the moving party to establish that a transfer would allow a case to proceed more conveniently and better serve the interests of justice." Florens Container v. Cho Yang Shipping, 245 F. Supp. 2d 1086, 1088 (N.D. Cal. 202).

"In judging the weight to be given to a plaintiff's choice of forum, 'consideration must be given to the extent both of the defendant's business contacts with the chosen forum and of the plaintiff's contacts, including those relating to [plaintiff's] cause of action. If the operative facts have not occurred within the forum of original selection and that forum has no particular interest in the parties or the subject matter, the plaintiff's choice is only entitled to minimal consideration.'" Id. at 1092, quoting Pacific Car and Foundry Co. v. Pence, 403 F.2d 949, 954 (9th Cir. 1968). Nevertheless, "under Ninth Circuit law, a plaintiff's choice of forum is accorded substantial weight in proceedings under this section, and courts generally will not transfer an action unless the 'convenience' and 'justice' factors strongly favor venue elsewhere." Id.

More specifically, "[a] motion to transfer venue under § 1404(a) requires the court to weigh multiple factors in its determination whether transfer is appropriate in a particular case. For example, the court may consider:

(1) the location where the relevant agreements were negotiated and executed, (2) the state that is most familiar with the governing law, (3) the plaintiff's choice of forum, (4) the respective parties' contacts with the forum, (5) the contacts relating to the plaintiff's cause of action in the chosen forum, (6) the differences in the costs of litigation in the two forums, (7) the availability of compulsory process to compel attendance of unwilling non-party witnesses, and (8) the ease of access to sources of proof." Jones v. GNC Franchising, Inc., 211 F.3d 495, 498-499 (9th Cir. 2000). "[T]he relevant public policy of the forum state, if any, is at least as significant a factor in the § 1404(a) balancing." Id. at 499.

"The convenience of the witnesses is often the most important factor. Here, courts look to who the witnesses are, where they are located, what their testimony will be, and why such testimony is relevant." Florens, 245 F. Supp. 2d at 1093. "The party seeking a transfer cannot rely on vague generalizations as to the convenience factors. The moving party is obligated to identify the key witnesses to be called and to present a generalized statement of what their testimony would include." Id.

Ultimately, Defendant "bears a heavy burden of showing a clear balance of inconveniences to it." E. & J. Gallo Winery v. F. & P. S.p.A., 899 F. Supp. 465, 466 (E.D. Cal. 1994). Defendant failed to meet that burden here.

In this case, Defendant argues only that a transfer is necessary based on the following facts:

1) Plaintiff initially sued only Magellan, stating that Knight had responded to Plaintiff's cease and desist letter by "recognizing the parallels between his Infringing Course and the CME Course, and agreed to cease his actions in order to remedy the matter as between Knight and CME." Complaint, ¶ 15.

2) All party witnesses are allegedly residents of Maryland.

3) Maryland law is applicable under the various agreements.

Motion, 7:13-8:2.

In light of the fact that both Plaintiff and Defendant Knight are California citizens, not only are some of these allegations patently false, they simply do not rise to the level necessary to convince this Court that transfer is proper. Accordingly, Defendant's Motion to Transfer is denied.

C. Motion to Dismiss Under Rule 12(b)(6) Or, Alternatively, Motion for Summary Judgment

According to Magellan: 1) Plaintiff failed to state a claim for copying; and 2) Plaintiff cannot recover from Defendant since Magellan is an "innocent infringer."

1. Plaintiff Adequately Stated a Claim for Copying

Magellan claims that Plaintiff "fails to make a claim for copying as it admits that Defendant Magellan did not actually copy CE Resource's work nor does it allege that Magellan had access to it." Motion, 10:3-6.

"To state a claim for copyright infringement, plaintiffs must allege: '(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.'" Zella v. E.W. Scripps Co., 529 F. Supp. 2d 1124, 1132 (C.D. Cal. 2007), quoting Feist Publ'ns, Inc. v. Rural Tele. Serv. Co., 499 U.S. 340, 361 (1991). "The second prong...requires plaintiffs to allege that 'the infringer had access to plaintiff's copyrighted work and that the works at issue are substantially similar in their protected elements.'" Id. at 1132-1133, quoting Cavalier v. Random House, Inc., 297 F.3d 815, 822 (9th Cir. 2002).

Here, Plaintiff alleges that Defendant Magellan had access to the original course by way of Defendant Knight, who had created that course for Plaintiff as a work for hire, and that the courses provided by Magellan via its website were identical, at least in part, to that original product. These allegations are sufficient to survive the instant Motion to Dismiss.

2. Plaintiff Did/Did Not State a Claim for Damages

Magellan next argues that it cannot be liable for damages for its alleged infringement of Plaintiff's copyright because Magellan innocently infringed in reliance on the lack of notice on the original work. Defendant relies 17 U.S.C. § 405(b) which states:

Effect of Omission on Innocent Infringers. -- Any person who innocently infringes a copyright, in reliance upon an authorized copy or phonorecord from which the copyright notice has been omitted and which was publicly distributed by authority of the copyright owner before the effective date of the Berne Convention Implementation Act of 1988, incurs no liability for actual or statutory damages under section 504 for any infringing acts committed before receiving actual notice that registration for the work has been made under section 408, if such person proves that he or she was misled by the omission of notice. In a suit for infringement in such a case the court may allow or disallow recovery of any of the infringer's profits attributable to the infringement, and may enjoin the continuation of the infringing undertaking or may require, as a condition for permitting the continuation of the infringing undertaking, that the infringer pay the copyright owner a reasonable license fee in an amount and on terms fixed by the court.

Accordingly, Magellan asserts that it was never put on notice that rights to the works provided by Knight belonged to Plaintiff. As such, Magellan contends it is entitled to an absolute defense as an "innocent infringer."

However, Magellan's argument ignores several important factors. First, this statutory section is only applicable if the alleged infringer relied on an "authorized" copy. In this case, Plaintiff alleges that the copies produced by Knight were unauthorized. Additionally, the statutory section applies only to works publicly distributed prior to the effective date of the Berne Convention, which was March 1, 1989. Pub.L. No. 100-568, 102 Stat. 2852. There is no dispute that the distribution of works in this case occurred years later, and, thus this case is not subject to the notice requirement. See Norma Ribbon & Trimming, Inc. v. Little, 51 F.3d 45, 48 (5th Cir. 1995). Accordingly, Defendant's argument is rejected.

D. SMJ Dismissal as to State Law Claims

Finally, Defendant attacks Plaintiff's state law claims alleging: 1) the Court lacks supplemental jurisdiction over those causes of action because they are unrelated in fact and law to the copyright claim; and 2) Plaintiff's state law claims are preempted by the Copyright Act, 17 U.S.C. § 301(a). This Court disagrees.

1. Subject Matter Jurisdiction

By way of its challenge to this Court's subject matter jurisdiction, Defendant makes only the unsupported assertion that "there is no supplemental jurisdiction for these state claims as they are entirely unrelated in both fact and law to the original copyright claim based on publishing Knight's course." Motion, 13:10-13.

In moving to dismiss under Rule 12 (b)(1), the challenging party may either make a "facial attack" on the allegations of jurisdiction contained in the complaint or can instead take issue with subject matter jurisdiction on a factual basis ("factual attack"). Thornhill Publishing Co. v. General Tel. & Elect. Corp., 594 F.2d 730, 733 (9th Cir. 1979); Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). If the motion constitutes a facial attack, the Court must consider the factual allegations of the complaint to be true. Williamson v. Tucker, 645 F.2d 404, 412 (5th Cir. 1981); Mortensen, 549 F.2d at 891.

If the motion constitutes a factual attack, however, "no presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims." Thornhill, 594 F.2d at 733 (quoting Mortensen, 549 F.2d at 891).

It is clear that, in the instant case, the Court lacks jurisdiction over Plaintiff's state law claims under either 28 U.S.C. §§ 1331 or 1332. Nevertheless, "...in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution." 28 U.S.C. § 1367(a). "[J]ust because a state law claim does not arise out of the same transaction or occurrence as the federal law claim does not mean that the state law claim does not arise out of facts that bear some relationship to the facts from which the federal claim arises so that the state claim and the federal claim are considered part of the same constitutional 'case.'" Sparrow v. Mazda American Credit, 385 F. Supp. 2d 1063, 1067 (E.D. Cal. 2005).

Plaintiff has adequately alleged that all causes of action in its Complaint derive from Defendant's activity in offering products for sale in its virtual store and for use in its virtual classroom.

Plaintiff's state law claims turn, at least in part, on the alleged use of material improperly acquired from Plaintiff to further a pattern or practice of unfair competition and deception, which is said to have caused injury to California consumers and to Plaintiff. Accordingly, the Court is satisfied that it has subject matter jurisdiction over all claims in Plaintiff's Complaint, and Defendant's arguments to the contrary are rejected.

B. Preemption of State Law Claims

Finally, Defendant argues that Plaintiff's state law claims are preempted by the Copyright Act. "The Copyright Act explicitly preempts state laws that regulate in the area of copyright, stating that 'all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106...are governed exclusively by this title.'" Sybersound Records, Inc. v. UAV Corp., 517 F.3d 1137, 1150 (9th Cir. 2008), quoting 17 U.S.C. § 301(a). "The Copyright Act preempts a state law cause of action when two requirements are met. First, the rights asserted under state law must be rights that are equivalent to those protected by the copyright act. Second, the work involved must fall within the subject matter of the Copyright Act as set forth in 17 U.S.C. §§ 102 and 103." Silicon Image, Inc. v. Analogix Semiconductor, Inc., 2007 WL 1455903, *7 (N.D. Cal.), quoting Kadadek v. MTV Networks, Inc., 152 F.3d 1209, 1212 (9th Cir. 1998) (internal quotations omitted).

"The determination of whether state law rights are 'equivalent' to those protected by the Copyright Act 'involves determining whether the state law claim contains an element not shared by the federal law.'" Id., quoting Summit Mach. Tool Mfg. v. Victor CNC Sys., 7 F.3d 1434, 1440 (9th Cir. 1993). "The Copyright Act provides copyright owners with the exclusive rights of reproduction, distribution, performance, display and preparation of derivative works." Id., citing 17 U.S.C. § 106. "If a state law claim includes an 'extra element' that makes the right asserted qualitatively different from those protected under the Copyright Act, the state law is not preempted by the Copyright Act." Id., quoting Altera Corp. v. Clear Logic, 424 F.3d 1079, 1089 (2005).

Plaintiff in this case brings state law causes of action under California's Unfair Competition Law, Business & Professions Code § 17200, et seq., and California's False Advertising Law, Business & Professions Code § 17500, et seq., neither of which is preempted here.

Both of the state law claims directed at Defendant Magellan are premised on allegations that Defendant, inter alia, failed to conduct due diligence and wrongfully represented its own qualifications as a continuing education provider. Plaintiff does not allege that Defendant "has created the false impression that its reproduction of the [product] is authorized - which would amount to a copyright infringement claim." Silicon Image, Inc., 2007 WL 1455903, *8. Rather, Plaintiff specifically argues that "[i]t is not the mere act of copying that gives rise to liability under Sections 17200 and 17500, but rather the use of the Infringing Course to deceive consumers about Magellan's qualifications to offer continuing education." Opposition, 26:18-21, citing FAC ¶¶ 22-24. Accordingly, as alleged, Plaintiff's state law claims are not preempted by federal law.

CONCLUSION

For the reasons just stated, Defendant's Motion to Dismiss And/Or Motion for Summary Judgment (Docket No. 24) is DENIED.

IT IS SO ORDERED.


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